President Donald Trump, an avowed peacemaker who has struggled to quickly end the wars in Ukraine and Gaza, now has the first successful manifestation of his doctrine of “peace through strength.” A brand-new (and still fragile) ceasefire between Iran and Israel, which followed U.S. airstrikes on Iran’s nuclear facilities, likely puts an end to a putative rift between hardcore MAGA isolationists and those who subscribe to Trump’s new, hawkish definition of America First.
Even before the ceasefire was announced, Republicans in Congress overwhelmingly supported Trump’s decision to strike Iran’s nuclear sites. So did the Republican voters across the country, 68% of whom approved of the strikes, compared to 16% of Democrats and 27% of independents. The latter, a key swing group that backed Trump in 2024, seemed receptive to his rationale for bombing Iran (their support rose 16 percentage points after it took place) despite being less interventionist overall. Time will tell whether this translates into a measurable boost in support for the controversial items on the president’s domestic agenda that independents view negatively, such as immigration enforcement (net approval of -18 points), inflation (-50 points), or his signature tax and spending package currently making its way through Congress (-51 points).
The White House is planning a “victory tour” to mark Trump’s first major foreign policy achievement of his second term, beginning with the NATO summit in the Netherlands this week and ramping up domestically to serve as an unofficial start of the 2026 midterm campaign. In the meantime, Democrats in Congress continue to grapple with internal divisions as they try to push thought a resolution to bar the Trump administration from taking further military action without congressional approval. Several are circulating in the U.S. Senate and House, but none are likely to pass as the Republican leaders hunker down for a final series of votes on the tax and spending legislation which the president expects to be on his desk by July 4. Amid last-minute disagreements to be ironed out and reported ceasefire violations on both sides, the coming days and weeks could come to define Trump’s second presidency while ushering in a fundamentally new era for the Middle East, its security, and its dominant powers.
Rare earth minerals remain at the center of the ongoing trade talks between Washington and Beijing. The “London framework,” which reinforces the “Geneva consensus,” has reset the trade relationship roughly to where it was before a tit-for-tat tariff escalation in April. U.S. duties on Chinese imports have been reduced to 55% from 145% for 90 days, and possibly longer (although certain product categories remain subject to tariff stacking), while some export controls have been relaxed in exchange for a six-month loosening of restrictions on Chinese rare earth minerals and magnets.
To date, China has granted export permits to select suppliers, including those serving Detroit’s Big Three, but the approvals are narrow in scope, time-limited, and strategically controlled, preserving Beijing’s leverage. Many American companies are still waiting for permits while others face restrictions on selling to China (which the U.S. has been similarly slow to relax and could expand in the future), underscoring an urgent need for alternative sources and domestic production capacity.
In absolute terms, U.S. rare earths imports are small, about $170 million in 2024, but they are essential for manufacturing critical auto components and weapons systems, which remain outside the scope of the tentative trade deal with China. If no firm agreement is reached within six months, these and other industries would face serious disruption, including higher component costs and production halts due to shortages of critical materials (like neodymium and dysprosium used in EV motors).
The Trump administration is exploring ways to use the Defense Production Act to tap financing and other support for domestic rare earths-related projects, mandated under an executive order signed in March, although a specific course of action is yet to be determined. Trump officials are also reviving Biden-era efforts to create a domestic supply chain for rare earth magnets, soliciting proposals to bolster domestic supplies of the magnets within the next six to 12 months. But even though domestic production efforts are growing and supply diversification is underway, they are insufficient to fully offset risks to the U.S. economy in the near-term, positioning the issue as a major irritant in the U.S.-China relations at least through the rest of Trump’s presidency.
The Senate portion of President Trump’s tax and spending package is coming together amid a push by moderate Republicans to preserve some clean energy subsidies and industry lobbying to protect projects across the U.S. battery belt and ensure sufficient energy supply to power America’s AI growth.
The latest draft by the Senate Finance Committee follows the U.S. House lead in proposing a tight phaseout period for wind and solar projects that begin construction by 2028, but extends tax incentives for nuclear, hydropower and geothermal projects that start construction as late as 2035.
Consumer tax credits for new electric vehicles would now phase out within 180 days after the bill becomes law, and for used vehicles within 90 days. The Senate Finance version preserves a tax break for car loan interest for U.S.-assembled vehicles first introduced in the House, but omits a provision to establish EV and hybrid vehicle annual registration fees, which could still be included at a later stage.
Business-friendly proposals include bringing back transferability, a policy that allows energy project sponsors to transfer their credits to a third party, and loosening some anti-China rules by narrowing the scope of what would be blocked from claiming the credits.
Any changes passed in the Senate would require approval in the House, where hardline conservatives advocate for an end to any future spending under the Inflation Reduction Act, potentially upsetting the delicate balance of support that allowed Speaker Mike Johnson to force the all-Republican bill through last month. (To be clear, the tax and spending package, which on the whole is largely unpopular, includes provisions that are even more divisive, such as cuts to public health insurance and nutrition support programs that serve low-income Americans.)
Republican leaders are operating under a tight deadline, hoping to pass the bicameral compromise legislation and deliver it to President Trump’s desk by July 4, but that may have to be pushed further into the summer as they grapple with intra-party disagreements and procedural hurdles. We look forward to reviewing the final bill and will let you know of any important developments.
